Editorial: Colleges need new rating system

President Barack Obama wants the federal government to get into the college ratings business, to the dismay of some college administrators.

“It is time to stop subsidizing schools that are not producing good results, and reward schools that deliver for American students and our future,” Obama said when he announced the idea during the summer.

His goal is to move away from the rankings rat race that favors higher spending, selectivity and prestige, like U.S. News & World Report’s annual so-called “Best Colleges” guide, toward a system that emphasizes affordability and the value of a college education. He’s headed in the right direction.

Students and their families should know which colleges turn out students with debt but no degree, and which colleges have high graduation rates, low student loan default rates and affordable cost. This will have to be done carefully to avoid creating perverse incentives that, for example, favor schools that admit fewer disadvantaged students.

Unlimited Digital Access: Only $0.99 For Your First Month

Get full access to The Sacramento Bee content across all your devices.

• Graduation. Only 58 percent of full-time students who started college in 2004 had earned four-year degrees by 2010.

• Debt. The average borrower with a bachelor's degree graduates with more than $29,400 in debt.

• Default. While student loan default rates fell from more than 20 percent in 1990 to less than 5 percent in 2005, default rates have been rising and are at 10 percent. Default rates for students at for-profits schools are 14 percent, and at 15 percent at public two-year colleges.

The nation needs to fix this. Education beyond high school remains the best way for young people to invest in their future. And California is falling far short.

Only 39 percent of Californians ages 25 to 64 had at least an associate’s degree in 2010, placing California 23rd among the states. That is costly to individuals and hurts the state’s long-term economic prospects.

Tracking admissions, costs and outcomes should help. The president wants to measure access by, for example, tracking the percentage of students receiving Pell grants. He wants to measure affordability by tracking net price and loan burden.

He also wants to measure outcome, including graduation and transfer rates, completion of degrees and percentage of students in further schooling, the military, volunteer positions, such as AmeriCorps or Peace Corps, or in jobs within a year of leaving school. To avoid penalizing schools that recruit low- and moderate-income students, Obama proposes to give colleges bonuses based upon the number of Pell Grant students they graduate.

Before embracing Obama’s concept, however, we should ask how to prevent schools from dumbing down graduation requirements and inflating grades to boost graduation rates.

There is lively debate about whether the rating system should include post-college earnings. No one should want a system that penalizes schools whose graduates go into public service or nonprofit work. Obama, after all, worked as a community organizer where, he wrote, he earned “$12,000 a year plus $2,000 for an old, beat-up car.”

With taxpayers putting more than $150 billion a year toward federal student loans and grants, the federal government ought to expect accountability.

California has moved in that direction, adopting eligibility standards for schools participating in the Cal Grant program. The legislative analyst has recommended accounting for differences in schools’ populations to avoid creating a disincentive for schools to serve disadvantaged students. Obama’s rating system should do that, too.

Difficult as it will be to settle on details, this is a worthwhile endeavor.